The lower house of the Kazakhstani parliament, the Majilis, has approved amendments to the law on the budget system. The amendments impose a 0.5% tax on foreign currency transactions. According to the Deputy Finance Minister, Mrs. Yertlesova, the government expects to raise KZT 2bn (USD 23m) through the newly imposed tax. She said that Kazakhstani residents purchased over USD 4.3bn last year.

Parliamentarians have also passed a proposal on sharing taxes between local and republican budgets. From now on, 15% of oil excises will be distributed to local budgets while 85% will go into the republican budget. The environmental tax will be shared 50:50. (Reuters)

The Minister of State Revenues,Zeinulla Kakimzhanov, said at a meeting of representatives of Kazakhstani oil refineries on 4 March that the government is prepared to decrease the excise on the production of gasoline. The excise tax on diesel fuel may be removed entirely. The existing excise taxes on petroleum products and the smuggled imports of gasoline from Russia have made the domestic products non-competitive. (Interfax)

From February 2-23, deflation in Kazakhstan totalled 0.2 pp. The prices of food products fell by 0.2pp while the prices of non-food products became 0.5pp cheaper. At the same time, services grew in price by 0.4pp. This information was presented to Interfax by the press services of the National Bank of Kazakhstan. According to the same sources, the Tenge devalued in January by 1.3% on the Dollar on the AFINEX and between 1-24 February—by 1.2%. February was generally characterised by a drop in the demand for dollars on the Kazakhstani money market. This resulted in reduced traded volumes both on the AFINEX and on the interbank market. During the first three weeks of February, traded volumes fell more than 10 times on the AFINEX compared with the same period in January. (Interfax)

The Minister of Energy, Industry and Trade, Mukhtar Ablyazov, and the US Ambassador to Kazakhstan, Richard Jones, signed a USD 500,000 agreement in Astana on 2 March to work out a feasibility study for supplying gas to the capital of Astana. The feasibility study, of which the total cost is estimated at USD 775,000, will be prepared by a U.S. company. One option for the project is to build a 250 km pipeline from the town of Ishim, Russia, to Petropavlovsk in the north of Kazakhstan and then to use the existing pipeline between Petropavlovsk and Astana which is idle now. A second option is to re-equip the existing pipeline that connects Chelyabinsk, Russia, and Petropavlovsk. (IRBIS).

Kazakhstani pension funds are competing successfully with foreign portfolio investors on the Kazakhstani sovereign bonds market. According to analysts, a decrease in the spread on Kazakhstani bonds has resulted largely due to the domestic demand for these papers. Kazakhstan issued Eurobonds in 1996 and 1997 amounting to USD 200m and USD 350m, respectively. The issues mature in 1999 and 2002. The National Securities Commission (NSC) allowed pension funds to buy Eurobonds last year. According to asset management companies (AMC), as of 1 January 1999, pension funds had invested USD 50m in Eurobonds. The purchase of Eurobonds by pension funds affected significantly the yield which fell to 11% after it was 30% following Russia's crisis last summer. According to the National Bank, pension funds accumulated about USD 280m by the end of 1998. This seems to be a considerable sum given the fact that pension funds only started operating in the middle of last year. (Reuters)